Argument preview: A Texas border water war

Posted Fri, April 19th, 2013 4:57 pm by Thomas Merrill

On Tuesday in Tarrant Regional Water District v. Herrmann, the Court will consider whether thirsty residents in the Dallas-Fort Worth area of Texas can tap into water resources located in Oklahoma in order to slake their growing need for water. The specific dispute arose when the petitioner, a water district serving north Texas, applied for permits to take water from tributaries of the Red River just north of the border between Texas and Oklahoma. Oklahoma had at that time enacted statutes imposing a moratorium on any diversions of water out of state. The water district therefore also filed suit in federal district court, arguing that the protectionist Oklahoma moratorium violated the dormant Commerce Clause. After procedural skirmishing, the moratorium expired and was replaced by a series of statutes that disfavored out-of-state transfers relative to in-state transfers. The water district amended its complaint to challenge these discriminatory laws under the dormant Commerce Clause.

As the legal arguments evolved in the lower courts, the focus began to shift from the dormant Commerce Clause to the Red River Compact, an interstate compact governing the allocation of water in the Red River Basin among the states of Oklahoma, Texas, Arkansas, and Louisiana. The Red River starts in New Mexico, flows east along the border between Oklahoma and Texas, enters Arkansas, and finally flows south into Louisiana, where it discharges into the Mississippi. The Red River Compact divides the river into five reaches, which are in turn divided into subbasins. The area in controversy is Reach II, Subbasin 5, which falls on both sides of the river in the eastern part of Texas and Oklahoma.

The reason the Red River Compact has taken center stage, and the dormant Commerce Clause has faded into the background, is that Congress can adopt legislation authorizing discrimination against interstate commerce that would otherwise violate the dormant Commerce Clause. The Red River Compact was negotiated among the four affected states, but was then approved in legislation adopted by Congress.

The critical clause of the Red River Compact reads as follows:

The Signatory States shall have equal rights to the use of runoff originating in subbasin 5 and undesignated water flowing into subbasin 5, so long as the flow of the Red River at the Arkansas-Louisiana state boundary is 3,000 cubic feet per second or more, provided no state is entitled to more than 25 percent of the water in excess of 3,000 cubic feet per second.

Everyone agrees that this provision restricts Texas and Oklahoma from taking water from the Red River basin if this will reduce the flow at the border of Louisiana below 3,000 cubic feet per second. The dispute centers on what the clause means when there is excess water above this level. Oklahoma argues, and the Tenth Circuit held in the decision under review, that the clause simply permits each state to take up to twenty-five percent of the excess water that it can obtain within its own borders. The Texas water district argues that the Compact language does the opposite – it expressly authorizes cross-border transfers of water. Hence, according to Texas, joined on this point by the United States as an amicus, the Compact itself preempts the Oklahoma laws that restrict access to its water to out-of-state entities.

Whether or to what extent the dormant Commerce Clause applies to water transfers is an interesting question. This is because many water rights regimes differentiate between transfers within and transfer outside of a watershed. Water transferred within a watershed presumably flows back into the watershed, at least in part, and is therefore available for downstream users. Water transferred outside a watershed is presumably not available for downstream users. This differentiation has a long history. It plays a prominent role in Eastern states that follow the “riparian” rule, whereby water rights are assigned to the owners of land through which the water flows. In these states, reasonable use or consumption of water is permitted, and one factor weighed in determining reasonableness is whether the water is being diverted outside the watershed. Western states like Oklahoma are more likely to follow the prior appropriation rule, which assigns water to the first person who makes a “beneficial” use of it. Prior appropriation states are more likely to permit diversions of water from the watershed. But even in these states, transfers of water that cause it to be diverted outside the watershed may be limited or prohibited in the interest of promoting return flow for use by downstream appropriators.

If a state has a water rights regime that prohibits or discourages diversion from the watershed, it is doubtful that such a rule would violate the dormant Commerce Clause. One reason is that if such a rule applies to in-state and out-of-state users alike, it would not discriminate against interstate commerce in the relevant sense. The rule would have the effect of prohibiting certain transfers across state lines, but its purpose would be to promote return flow, and hence to conserve water, not to discriminate against interstate commerce. The Supreme Court in Sporhase v. Nebraska ex rel. Douglas (1982) held that a Nebraska statute that prohibited the transfer of groundwater from Nebraska to Colorado violated the dormant Commerce Clause. But it did so on the narrow ground that the Nebraska statute prohibited transfers to states that did not permit reciprocal transfers to Nebraska. Portions of the Court’s opinion imply that state rules designed to conserve water and that apply in a nondiscriminatory fashion to in-state and out-of-state users would pass muster.

There is a deeper reason why a rule against diversion outside the watershed might not implicate the dormant Commerce Clause. If a state treats water as a resource that must remain in the watershed, it is not clear that such water should be regarded as “commerce” in the relevant sense that the term is used in the Commerce Clause. Suppose, for example, that a state follows the old “natural flow” theory that prohibits any diversion or consumption of water from a stream. Here, it would seem that the water is a resource permanently affixed to the land, and not something eligible for commercial transactions separately from transactions in land. Similarly, if a state requires that water remain within a watershed, it might not be appropriate to regard the water as the kind of resource subject to the Commerce Clause – at least not in the ordinary sense.

The briefs in Tarrant do not discuss whether Oklahoma has any non-discriminatory rules against transfers of water outside the watershed. If there are such rules, they might prohibit the transfer of water to the Dallas-Fort Worth area, since it appears from maps attached to the briefs in the case that this area is outside the Red River watershed. It is clear that Oklahoma does have rules that facially discriminate against out-of-state transfers of water. But if such transfers would be prohibited in any event, or if we conclude that water in Oklahoma is not “commerce” in the full-blown sense because of restrictions on transfers outside the watershed, then these discriminatory laws might be deemed harmless, or might be regarded as not implicating the dormant Commerce Clause.

The question whether the Red River Compact overrides the dormant Commerce Clause or preempts Oklahoma legislation that burdens cross-border transfers to Texas is less interesting. The parties debate various inferences that can be drawn from other clauses in the Compact, from the course of implementation of the compact by the parties, and whether the presumption against preemption applies to an interstate compact approved by Congress.

My own take is that the language of the Compact addressing Reach II, Subbasin 5 neither authorizes nor prohibits cross-border transfers. The primary purpose of the language, as the court of appeals held, is to make clear that Louisiana is entitled to get at least 3,000 cubic feet per second at the Arkansas-Louisiana border. A secondary purpose is to specify that in allocating the surplus water above the Louisiana entitlement, no state is entitled to more than twenty-five percent of the excess. But there is no language in the clause that authorizes one state to enter another state to take water. Nor for that matter, is there any language that prohibits one state from entering another to take water. The clause says that the signatory states have “equal rights” to the excess, but this could mean that each state has an equal opportunity to take excess water – either in its own territory or in the territory of another with its consent. It does not necessarily mean that a state can cross the border of another to obtain an equal share of water up to twenty-five percent of the excess.

If the Compact is silent on the question of cross-border transfers of excess water, how then is the case to be decided? The correct answer, I would submit, is to revert to the dormant Commerce Clause. The parties’ briefs have very little to say about the dormant Commerce Clause. As suggested above, the fact that Oklahoma law facially discriminates against interstate transfers does not necessarily settle the matter. If we were talking about bottled water, facial discrimination would be fatal. But the record is unclear as to whether Oklahoma treats surface water as an item of “commerce,” in the sense of a commodity that can be bought and sold without reference to its place of use. If the Court ultimately decides that the dormant Commerce Clause is the relevant basis for resolving the case, it might wish to remand for a fuller development of the record about the nature of Oklahoma water law.

Thomas Merrill is the Charles Evans Hughes Professor of Law at Columbia Law School.

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On Friday, April 3, Justice Stephen Breyer spoke to students at the United Nations International School in New York City. The justice gave his talk remotely via video call, while self-quarantining at home in Massachusetts with his wife and daughter.